Governor concerned over possible cannibalization from VGTs
A provision in the gaming expansion legislation passed by the Pennsylvania House of Representatives that would legalize video gaming terminals in liquor-licensed establishments across the state has its share of opponents among state senators now considering the package of legislation. But none are more vocal than lawmakers representing the Philadelphia area.
Most lawmakers who oppose the measure are joined by leaders of the 12 land-based casinos in saying the VGT measure, which would authorize from five to 10 video slots in each of thousands of bars and taverns—an estimated total of as many as 40,000 terminals—would cannibalize slot revenue from land-based casinos. (Proponents say the measure would simply legalize and tax the gray-area terminals already in place.) But Philadelphia lawmakers have another reason to oppose them—they say legal VGTs would boost the so-called “stop-and-go” convenience stores they have been trying to eradicate.
Stop-and-go stores are neighborhood convenience stores, delis and gas stations with liquor licenses that sell hard liquor by the shot. Local lawmakers view them as a nuisance that leads to loitering and public drunkenness. There are hundreds of these establishments in Philadelphia.
During debate of the VGT measure, which was added to the House measure along with other expansion measures before the package was sent back to the Senate, Philadelphia lawmakers complained that the stop-and-go stores are deteriorating the city, and the VGT measure would only make things worse. “This bill will give them slot machines and games,” said Rep. Stephen Kinsey. “We should not, and cannot, support this shots-and-slots legislation.”
Last week several Philadelphia-area House members proposed a new bill that would prevent stop-and-go’s from obtaining VGTs if the expansion package is signed into law. The bill would require tougher standards for a VGT license, including enforcement of requirements for seating, food sales and food preparation that are now routinely ignored.
“A stop-and-go establishment is right next door to my district office that is currently operating after being cited for various violations,” said Philadelphia Democratic Rep. Christopher Rabb, a co-sponsor of the bill, in an interview with the Philadelphia Inquirer. “Its owner is neither a resident of my district or the city, and has no known ties to the local business or civic community.
“The business regularly has intoxicated customers, loiterers and panhandlers, and serves dozens of unaccompanied minors from Henry Houston School every weekday afternoon. VGTs in businesses such as these that prey on historically marginalized communities would make them commercial super-predators.”
Pittsburgh-area Rep. Mark Mustio, who sponsored the VGT measure in the House, told the newspaper he agrees with the Philadelphia lawmakers on the stop-and-go issue, and tried to address it in the legislation by requiring small establishments to be inspected by a liquor control officer before getting a license.
The VGT provision is part of a broad gaming expansion package now before the state Senate that would legalize and regulate online gaming and daily fantasy sports, tablet iGaming at airports, satellite slot operations at off-track betting facilities and online lottery sales. It also contains a provision to replace the local-community host fee struck down last year by the state Supreme Court.
A group financed by Las Vegas Sands, the owner of Sands Bethlehem, is betting $1 million against VGTs.
“This proposal would destroy the brick-and-mortar casino industry and risk the nearly $1.4 billion in tax revenues that these establishments generate annually,” Michael Bailey, spokesman for Pennsylvanians for Responsible Government told the Allentown Morning Call. “Worse yet, because VGTs are designed to operate without employees, the 18,000 people casinos collectively employ in Pennsylvania will be put in serious jeopardy.”
The VGT issue, though, could be a major sticking point. For one thing, Democratic Governor Tom Wolf, while not outright opposing it so far, indicated last week that his own Department of Revenue officials say VGTs are likely to cannibalize some slot revenues, and that it would take at least a year to have regulations in place for the machines to actually begin earning revenue for the state.
Wolf’s budget for the fiscal year that begins July 1 includes $250 million from expanded gaming. At an unrelated event in Harrisburg last week, Wolf commented that any expansion measures in the bill before the Senate should be provisions that provide immediate revenue, and do not cut into current gaming income.
“I want real revenue, and I want net revenue,” Wolf said, according to the Associated Press. “I don’t want anything that we do in gaming or gambling to interfere with the revenues that are already in place. If it just cannibalizes and takes from one bucket called gambling to another, the commonwealth isn’t doing anything more than it has in the past.”
In addition to VGTs, Wolf was expressing opposition to a plan by Senate Republicans to borrow against future state revenues to fill the immediate budget gap of nearly $3 billion.
